UMDNJ to pay federal government $2M in Medicaid settlement

The state's medical university agreed today to pay $2 million to resolve long-standing civil charges in connection with an ongoing federal investigation over Medicaid fraud.

The settlement, announced by the U.S. Justice Department, was linked to a 2005 criminal case in which the University of Medicine and Dentistry of New Jersey was charged with deliberately double-billing both Medicaid and Medicare by nearly $5 million. That scandal led to the imposition of a two-year federal monitorship and sweeping changes in the school's administration.

Star-Ledger file photoThe University of Medicine & Dentistry of New Jersey in Newark, N.J. in a file photo.

The civil settlement, meanwhile, revealed for the first time that it was a former UMDNJ faculty member and attending physician, Steven Simring, who had alerted federal prosecutors to the illegal billing. As a whistleblower, Simring will receive $801,000 of the $2 million settlement being paid by the university.

Recently unsealed court records show Simring went to the U.S. Attorney more than a year before the criminal case was lodged.

"There were layers of fraud, and I don't think they've gotten to everyone who was responsible," Simring said in an interview today.

University officials said UMDNJ has greatly changed since the fraud came to light.

"This settlement agreement relates to inappropriate actions and poor management decisions made during a period between 1993 and 2004," spokesman Jeffrey Tolvin said. "Our new leadership team has diligently implemented numerous reforms that reflect the university's full commitment to exemplary corporate citizenship, corporate governance and the highest principles of integrity and professionalism."

During that period, UMDNJ's University Hospital in Newark submitted hundreds of claims to Medicaid for outpatient physician services that were being separately billed by doctors working in the hospital's outpatient centers, federal prosecutors said. Simring, then an associate professor of psychiatry at UMDNJ's New Jersey Medical School, said both the hospital and its faculty medical practice group knew they were each submitting duplicate claims for payment.

The billing issues at UMDNJ were complex and the hospital and its doctors were constantly at odds with each other over the matter. More than a decade earlier, memos show university officials were cautioned numerous times about the billing problems -- warnings that were repeatedly ignored -- as both sides continued to bill for the same services.

According to Simring, a 1984 court ruling which doctors called their "Magna Carta and constitution rolled up into one," gave ammunition to the faculty that only they could bill for patient services -- while university administrators insisted the doctors were hospital employees and only the hospital could bill. As a result, both sides billed Medicaid and Medicare millions of dollars for the same patient services.

"'It's not our problem.' That was their answer," Simring said, recalling meetings where faculty members were told if anyone was going to jail, it would be the hospital administrators, not them.

He went to prosecutors, filing a "qui tam," or whistleblower complaint, under seal, under the Federal False Claims Act. A year later, the university was criminally charged with $4.9 million in Medicaid and Medicare fraud. UMDNJ was subsequently told to accept federal oversight of its operations or face a criminal prosecution that could shut it down.

After the university paid back the money it had overbilled, it still had to resolve the civil liabilities it faced with the Justice Department and the state Department of Health and Human Services. The school agreed to pay another $2 million in an 18-page settlement released this afternoon.

"Today's settlement demonstrates that the Department of Justice will not tolerate fraud on our Medicaid programs, which were created to serve our nation's low-income families, children and seniors," said Tony West, Assistant Attorney General for the Justice Department's Civil Division.

Simring's attorney, Henry Furst of Montclair, said the case far from over.

"We still have the right to pursue individuals who were responsible," he said. "It is our intent to fully investigate what was started by Dr. Simring."